Column: Unlocking land title capital:

By: and |
Published: January 16, 2016 12:15:37 AM

The lack of clear land title and land records has inhibited the development of a functioning land market

Poverty is not because people are poor, but primarily because of their inability to capitalise, legally and easily, on the few assets they do possess.

India is now aspiring to trigger a start-up revolution. Millions of tiny businesses and enterprises, marginal farmers, particularly functioning in the informal sector, provide a tremendous cultural resource base for entrepreneurship. The only asset which most of these people possess is perhaps a patch of land. A large majority of these people have no ownership title, nor legally-protected user rights. MUDRA could be more effective, not just because it does not require collateral, but if it could recognise the true value of these assets and the economic significance for those who may possess and use them.

Think of the cobbler who sits at the same spot on a street corner, or the couple ironing clothes on the footpath. Or the family that runs a street side tea stall. They are all in possession of small patches of land, over which they have no title, yet, they feel secure enough to remain at that location, and cater to their customers.

The same phenomenon is witnessed in remote rural areas. When families grow, sometimes they go on to occupy a plot in the village common land, or nearby government land, or even forest land, and begin to cultivate that plot, or set up a small shop. Over time, possession over such a property is recognised by the local community as de facto ownership. Such plots are even bought and sold without any title document and typically “sell” at substantially lower than the prevailing market price.

There are perhaps tens of millions of such untitled plots, of various sizes and shapes, spread all across India. The use of these properties contributes significantly to the economic well-being of their owners and to the local economy. Yet, the properties themselves cannot be legally capitalised, thus depriving the “owners” access to much-needed capital to grow, retarding their aspiration to climb out of such marginal existence by the dint of their own effort. Frequently, such ‘owners’ are seen as encroachers and squatters and subjected to harassment by authorities. They are not ‘owners’ because there is no record of such pieces of land and the use they are being put to by their de facto owners.

Unfortunately, this problem is not restricted to marginal farmers or the urban poor in the informal sector. The poor state of land records, and the gross discrepancy between the records and the situation on the ground, is well known.

Many state governments have undertaken efforts to digitise land records under the aegis of the National Land Record Modernisation Programme (NLRMP). In most instances, the records have been digitised without corresponding verification and authentication of the ground realities.

Clean land titles, with defined property rights, have four key attributes—excludability, usability, controllability and transferability. This allows for capitalisation of the property, optimises its use, ensures investment in land to improve its productivity, and the surplus from land is then available for investment and use in other areas.

The debate over the ill-fated land ordinance in 2015 has demonstrated the political significance of land today. Now, there is an increasing prospect of technological convergence which can really help create a viable and functioning land market.

With the advent of low-cost, hand-held GPS and GPS-enabled mobile phones, the capacity of people to undertake basic surveys has greatly increased. Even partially literate people in a village are now able to operate these devices, navigating the commands through the icons, to plot the boundaries of land, and calculate its areas. Critically, the locals generally know who the owners are, who are in possession of which pieces of land, and which plots are disputed.

Access to satellite images on Google and other platforms is allowing people to locate and mark their property. The coordinates from plot boundaries compiled in the GPS instruments are being overlayed on satellite images to identify the area.

The accuracy of low-end GPS instruments, though, is not very high, typically in the range of 1 to 3 metres. Nevertheless, together with the satellite images, these provide a good indication to the qualified surveyors, particularly in rural areas, as to the location, shape and size of the land in question.

This methodology was pioneered by ARCH Vahini, in Narmada district in Gujarat a few years ago, for their work in assisting forest-dwelling communities map and document their claims over land and local forest resources under the Forest Rights Act, 2006. Today, community leaders together with their civil society mentors are adopting similar methodology in Chhattisgarh, Madhya Pradesh, Odisha and Uttarakhand.

If the bottom-up, community-driven mapping and documentation of land is facilitated, with the aid of GPS instruments and satellite images, then these could greatly augment the effort of

NLRMP. The former would provide an indication of the current status of the land from the ground. The latter would assist in flagging deficiencies in the present land records, which could then be narrowed down, and formally surveyed to ascertain the status and resolve or minimise the discrepancies. Such a participatory approach could help update land records within a couple of years.

Each plot of land carries unique latitude and longitude coordinates. These coordinates then could be linked through IDs such as Voter ID, PAN or Aadhaar of one of more claimant (s), tenant(s) and owner(s). This set of information could also be linked to court cases, if any, related to that property. This will also help flag any property where there is an ongoing legal dispute.

Blockchain is another new technology that could be a boon in tracking property transaction, making each transaction unique, thus greatly reducing the scope of malpractice and corruption.

Investors and industrialists prefer the land acquisition route to get access to land, precisely because of the poor state of land records, its divergence from the situation on the ground realities, and baulk at the prospect of getting sucked in to a quagmire of litigation.

Clear land title, together with transparent and up to date land records will encourage the development of a range of options from sale, lease, rent, equity, profit sharing, and other flexible compensation packages, which the land owners and rights holders would be able to negotiate with the investors to their mutual benefit.

Clear title enables unknown parties to engage in negotiations, assured of the status of the property. Lack of clear land title, and land records, has inhibited the development of a functioning land market, which has prevented land owners and land users to engage in mutually beneficial exchange.

Social benefit from reduced conflict over land will be huge in creating conducive political and economic environment. Add to this the low cost nature of the possible strategies, and the huge potential it holds in unlocking the mystery of capital, paving the way for inclusive economic growth.

This is an incredible opportunity in India today, healing the divisions over land between the LARR 2013 and the ordinance of 2015.

Barun S Mitra is director, Liberty Institute, a Delhi-based think-tank and Madhumita D Mitra is an independent legal consultant

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